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Tuesday, 29 September 2015

A few macro and related thoughts today...

A few macro and related thoughts today...

Markets – remain volatile. S&P futures have
fallen for 3 days in a row, dropping 2.9%. Run has extended to 4 days once in
the 129 sessions since 26 March 2015 (stat via Predicted Markets). The S&P
500 is now flat over the last 18 months, closing today within a few points of
where it closed at the end of March 2014.

Vol vs the last 3 years...going up

(h/t @GaveKalCapital)

Q3 vs YTD performance - shabby Shanghai, oil etc.

Interest rate cuts – overnight the Reserve Bank of
India has cut interest rates for the fourth time this year, a move in line with
expectations but by a greater degree than was anticipated.

The RBI cut the repo rate to 6.75 per cent, from 7.25 per
cent. Most economists had only anticipated a 25 bps cut.

Asia - Japan lost all its YTD gains. Not a
single stock up in the Nikkei 225 today. Meanwhile an overnight rate to
borrow yuan in Hong Kong jumped by a record to an all-time high as the
currency’s offshore exchange rate climbed to the strongest level since an Aug.
11 devaluation. The Hong Kong Interbank Offered Rate surged 535 basis points to
8.73 percent, a Treasury Markets Association fixing showed. That’s the highest
since the fixings began in June 2013 (stats via Bloomberg). Strange times

Interesting observations on China –

Japan Centre for Economic Research (JCER): China Q2 GDP may
have been just 5%, well below the reported 7% - Nikkei

From a HK based market observer: ‘There are 14 3rd~4th-tier
cities property price may face high risks of collapse!! First time I saw
such reports in major media’

Fascinating #1

(h/t @Eurofaultlines)

(h/t @lmtdown)

Commodity sentiment – Cargill decided to fold two
commodity funds that trade agriculture and energy under another branch of the
company and spin off three other funds as independent, employee-owned
companies. The ‘Black River’ business had US$7.4bn AUM as recently as
June.

Meanwhile Morgan Stanley capitulated on their earlier in the
year pro-energy sector call